Solving the Global ID Crisis with Blockchain
There are approximately 11 billion devices connected to the Internet today. As if that number wasn’t staggering enough, the figure is expected to surge to over 25 billion by the end of the decade.
This incredible rise in web connectivity for all forms of machines and devices, speaks, perhaps more than any other, to the growing need for reliable and accessible digital identity solutions.
At the individual level, having robust and effective identification tools allows people to interact with institutions and conduct trusted transactions with other individuals. At the level of organizations, companies need to have reliable methods for identifying and categorizing their clients. Only in this way can they effectively cater to their needs, deliver goods and services, and, perhaps most importantly, respond to changing factors influencing their markets and customer base.
However, the massive shift of human activity to the digital sphere and the risks that the trend has incurred is forcing changes in how identities work.
The age of data regulation has placed tremendous responsibility and new requirements on organizations that collect and store personal information – the details that form the very basis of identity. Years after some of the biggest data laws were passed, companies across industries are still struggling to find solutions that provide both the mandated level of security as well as the ease of access commensurate with business needs. Trends of individual users are also indicating a growing awareness of the failures of current identity models. Research has shown that 84% of customers will abandon an online purchase if there are indications a website isn’t able to securely store their identity.
Beyond security concerns, the simple lack of access to identity tools is still a major challenge affecting global populations. A World Bank survey found that over 1 billion individuals worldwide do not possess any form of identification. This figure includes half of all women in low-income countries. The difficulties obtaining reliable identification are a driving factor in the lack of access to healthcare, limited telecommunications, and the nearly two billion people worldwide without a bank account.
Is blockchain an answer to the ID challenge?
The invention and proliferation of blockchain, a technology that functions as a decentralized, digitized, and immutable ledger, has opened new possibilities for taking on the global identification challenge.
Using blockchain could address the three primary shortcomings of current ID models, namely, inaccessibility, insecurity, and fraud. One promising method, in particular, has been using tools known as ‘decentralized identifiers,’ or DIDs.
DIDs offer the high availability and cryptographic security necessary for a reliable ID. What’s more, all DIDs are globally unique, meaning there can, by design, be only one DID with specific cryptographic characteristics. This makes fraud in such a system, in theory, nearly impossible.
Within the DID system, the blockchain can function as the verifying device to allow any subject (either an individual or group) to be publicly identifiable. When a credential, such as a certificate, income statement, driver’s license, or passport, is issued, a public DID is attached to that credential and encoded on the blockchain. That DID becomes a permanent record of data. When a third party then seeks to verify the authenticity/validity of the credential, they can check the public DID on the blockchain to see who issued it without having to contact the issuing party.
In practice, the DID system relies on public/private key cryptography. This system would allow an individual to hold his or her ID in the form of a digitized private key which is then submitted in instances where authentication is required. This technological reality presents a tremendous opportunity to expand the dissemination of reliable IDs on a global scale.
Research into individuals lacking access to traditional financial institutions indicates that many, perhaps more than half, of those lacking official ID documents, do own smartphones. It is a simple feat to pair such devices with a decentralized identity, which can be verified in the form of a QR code.
Smart regulation and adoption
The core components of a blockchain-based digital ID issuance system are all widely used today. There are even several proof-of-concept prototype systems based on blockchain that have already been deployed.
The challenge at hand is making wide-scale adoption a reality, which in practical terms, means getting governments on board. Several advocates of public DIDs have created pilot programs designed for government use. The Netherlands-based Tykn for example, organized a trial program in Turkey, coordinating between multiple government agencies. The program aimed at addressing the growing number of refugees living and working in the country, allowing individuals with no prior credentials to acquire reliable and verifiable documentation.
These programs were geared toward solving a pertinent issue that policymakers were struggling with and DID specialists were able to find regulatory solutions that met government needs. Following the Tykn example, engineers created a platform for business owners to first verify their own traditional, state-issued IDs which were used to open a portal with a peer-to-peer connection with government agencies. This portal was then used as the basis for processing and issuing permits for refugees seeking employment from the business owner.
This is the pattern other blockchain-based identity schemes must take in order to achieve adoption. By identifying solutions for the problems facing elected officials and creatively crafting regulatory safeguards, decentralized, easy-access identity can become a solution to a pressing global challenge.